Should LMI policies be made fully transportable? Tell us what you think

by AB24 Apr 2013

Yesterday’s article, LMI needs fair play and full disclosure, says industry figure, raised the issue of LMI transportability - among other issues – and the comments came pouring in on both sides of the argument.

We’re interested in finding out what brokers in general think of LMI transportability, so we’ve whipped up a poll on our website. Let us know your point of view by clicking here.


  • by Ian in Qld 24/04/2013 10:38:52 AM

    For the customers making the policy transportable is logical. However I am sure the Mortgage Insurance provides will disagree. Such questions come up as:
    How long should the option be offered before the circumstances outlined on original application become effectively out of date and need to be re-assessed from a risk profiling point of view?

    What extra cost would there be to the insurance policy as it could be perceived to be an increased risk and an increase in the time-frame of higher risk?

    What would be the take up of clients, given this would not represent 100% of client needs?

    What is the average time-frame that an insured loan remains with a profile of Loan to Value Ratio requiring the insurance?

    I am certain these question would just be scratching the surface. Remember client's only see the cost, and the Mortgage Insurers only see the risk.


  • by LYNNE 24/04/2013 11:12:51 AM

    Definitely It's a ripoff!!!

  • by Randy in WA 24/04/2013 11:30:45 AM

    You wouldnt ask Allianz to take over the risk of a life assurance policy from SGIO without a re-assessment/ premium change based on the customers current circumstances?

    ....and the last time i changed my car insurance, I had to pay my premium again to the new insurer?

    The false perception is that life assurance, home insurance & car insurance is short term, whilst LMI is over 25-30 years...but we know that the average re-finance period for most borrowers is now <4 years in Oz...and much can change in borrower circumstances/ market conditions during this period

    Many lenders now have exclusive arrangements with mortgage insurers (CBA with Genworth and Suncorp with QBELMI for example) unless the borrower was moving to a lender with the same mortgage insurer (restricting 'choice' of lender for the existing borrower, which goes against recent regulatory changes aimed at opening up competition in the industry), this idea is almost unworkable

    We have to be careful in asking the mortgage insurers to allow transportation without premium...if this becomes financially unviable for the LMI providers (there's only two currently utilising their licences in Australia, outside the likes of ANZ/ Wesptac in-house), then we could see the return to 80% max lends

    ...and with a loan book of approx 80% being >80% LVR, I wouldnt want to see this happen!

    Transparency is vital (so agree with industry comment yesterday), but transportable LMI policy (no new premium) is a high risk move for our industry